Who is to blame for the fall of the stock market? Did they even try to stop the crash? Most say that Herbert Hoover is to blame for not successfully getting the United states out of the depression, but a contributing factor to why the stock market went from doing really well to shambles is because the mentality of the average person. New York Times Headlines were putting the average stockholder into a panic.
One of the big reasons for why the stock market prices had been skyrocketing prior to 1929 was because more Americans than ever before had purchased stock. Because of rising stock prices, many Americans believed that they could make a lot of money off of these stocks and investments. Unfortunately a lot of them couldn’t afford to invest, so they invested on credit. As long as prices continued to rise, the stockholder would continue to make a profit.
Unfortunately, that all changed on Black Thursday. At the beginning of the day, the Dow had opened at 305.85. It fell almost 11 percent which triggered a stock market correction. Wall street bankers came up with the plan to buy stocks to correct the stock market fall, which ended up working for that day, seeing as the decline was only up two percent later in the day. The Dow rose one percent to 301.22 the next day, giving the NYSE a false sense of security. Saturday, the Dow again fell, this time coming down to 298.97.
When Black Tuesday rolled around, the Dow the New York Stock Exchange had found that the Dow was 20 percent lower than it was from its high point on September 3rd. That was the sign of the market becoming unstable in its prices, also known as a bear market. In late September, stockholders became concerned about the large declines that were occurring in the British stock market. In response, the Dow dropped immensely not only on both of those days, but also again on October 16. The Washington Post announced a fall in ultra-safe utility stocks by October 19th and 20th.
The Wednesday a week before the ultimate crash, The Washington Post headlines read ‘Huge Selling Wave Creates Near-Panic as Stocks Collapse,’ while The Times headlines said ‘Prices of Stocks Crash in Heavy Liquidation.’ By the time Black Thursday rolled around, worry had overcome most stockholders and citizens as the worst crash in America was about to happen. One of the biggest causes of the long road to recovery was because of the mindset of the citizens. Not many had confidence in the market after this crash.
Soon following the crash of the market, President Hoover looked to help steer away from dismay among the people as to create less problems in the economy relating to the market’s crash. In November, he called business leaders to gather at the White House to talk to them about keeping wages the same. Hoover’s economic theory stated that financial losses should affect money gained, not unemployment/employment, therefore sustaining consumer spending and condensing the downturn would be beneficial for the economy. Private industry granted Hoover their commitments to spend $1.8 billion to be used toward new construction in public works. This was to start in 1930 as a step forward to help stimulate employment.
After October 29, 1929, stock prices were at an all time low, so there was considerable recovery during the next few weeks. Overall, prices continued to drop as the United States started to fall into the Great Depression. By 1932 stocks were worth only about 20 percent of their original worth in relation to the summer of 1929. The stock market crash of 1929 was not the sole cause of the Great Depression, but it did contribute to the global economic decline which it was also a factor. By 1933, a lot of America’s banks had failed, and unemployment was nearing 25 percent.
As a result of the stock market crash, people were struck with poverty and unemployment. The economy underwent the longest and most drastic depression it had ever been through. Many blame Herbert Hoover for “letting the economy fix itself,” but he had only been in office for 9 months. Towards the end of his term, he tried to create projects that would help stimulate the employment rate because of how high the unemployment rate had risen to.
In attempt to help the unemployment rate go down, Hoover created the PECE. This would help coordinate state and local relief programs, and to develop methods for increasing employment in the private sector. PECE only had limited success because it had no real direct source of funding. As the Depression got seemingly worse, Hoover asked that the Federal Reserve increase credit, and he persuaded Congress to transfer agricultural surpluses from the Federal Farm Board to the Red Cross for distribution to relief agencies. Hoover asked Congress for even more spending on public works, and he continued to encourage states and private businesses to generate new jobs.
One of Hoover’s biggest attempts to help the unemployment rate go down was by creating the Hoover dam. It was one of the largest public works projects of that time. For a short time, it did create few jobs which temporarily helped the unemployment go down. Unfortunately it was not a permanent resolution to this Great Depression. Part of the reason Hoover’s attempt to save the economy in the early 1930s failed was because one of his big beliefs was Rugged Individualism. This meant that he did not want the people to rely on the government for getting out of this Depression: “He was a self-made millionaire and expected others to be self-reliant.”
After Roosevelt was elected, it was soon evident that he needed to fix the economy very soon. He started signing off on projects and acts to try and relieve America of this horrid depression. FDR first started by signing off on FERA which helped the poor in the 1930s. At the time there was a large amount of poverty in America due to unemployment during the Depression. After that, Roosevelt’s plan of recovery, reform, and relief started steamrolling and he helped the economy greatly in this time of need.
Franklin D. Roosevelt created many projects and organizations following FERA such as the CCC, also known as the ECW. The CCC allowed unemployed men to work for six months on conservation projects such as planting trees, preventing soil erosion, and combating forest fires. One other helpful bill he signed was the NIRA. This act was put in action on June 16, 1933, very close to the end of the 100 day period. The NIRA helped both with creating jobs in public works and with ridding the country of unfair child labor. The two names this bill was given are PWA and NRA for having covered both public works and industry in its attempt to better the country. Wages were raised as well, which made it a lot easier for workers to both make more and spend more.
Although these organizations, projects, and bills were temporary, they lasted long enough to bring the United States out of the Great Depression. Roosevelt will always go down in history as one of the most effective and impactful presidents in history. Not to mention his wife, first Lady, Eleanor Roosevelt was also one of the most influential first ladies in history, right above Michelle Obama. Eleanor Roosevelt not only helped the poor but also stood up against racial discrimination which wasn’t popular for white people to do that early in the 20th century. Also during WWII, Eleanor traveled abroad with the U.S. troops.
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